debkafile military sources report that Israel's defense minister Ehud Barak has bowed to Hamas' insistence on assigning the negotiations for the release of Gilead Shalit, kidnapped two years ago, to "stage two" of the Egyptian-brokered truce accord. In other words, it has been left out of the deal. He also agrees in principle to swap most of the 450 jailed Palestinian terrorists demanded by Hamas, including scores of men "with blood on their hands." There are still reservations about a small number.

Commenting on the truce deal shaping up between Israel and Hamas for the Gaza Strip, debkafile's military sources note that the Olmert government has given way to Hamas on its two key demands: the incorporation in the package of the Israeli soldier, Gilead Shalit, who was kidnapped two years ago on Israeli soil, and an end to arms smuggling through Sinai for the Hamas war arsenal. Those sources note the similarity of this case with that of UN Security Council Resolution 1701 which halted the Lebanon War two years ago.

Noam Shalit plans to sue the Olmert government for failing to include his son, Gilead Shalit, kidnapped by Hamas two years ago, in the Gaza ceasefire accord with Hamas mediated by Egypt. He accuses prime minister Ehud Olmert and other officials of breaking explicit pledges to the Shalit family.

The prime minister Ehud Olmert's decision, coupled with orders to the military to stand by for all eventualities, was endorsed by the security cabinet Wednesday, June 11, as Hamas continued to shoot mortars at Israel. Four shells injured three Israelis at the same Kibbutz Nir-Oz factory where Amnon Rosenberg was killed last week. A storehouse of inflammable materials caught fire. debkafile's Middle East sources confirm that, contrary to various claims, Hamas has not accepted Israel's terms for a truce

Israel's embattled prime minister Ehud Olmert made a sudden U-turn Wednesday, June 11. He agreed to his Kadima party holding an early primary to elect a new leader. This was announced by Kadima MK Tzahi Hanegbi shortly after the security cabinet approved Olmert's decision to accept the Egyptian formula for a truce with Hamas, instead of launching a large-scale military campaign in Gaza. debkafile's political sources reveal that the two decisions were part of an undercover trade between Olmert and defense minister Ehud Barak (Labor leader).

Last week, Deputy Prime minister Shaul Mofaz said Israeli strikes on Iran looked "unavoidable" given its progress in uranium enrichment and ineffectiveness of the alternatives. Israelis are in jitters over Iran's rapid progress towards nuclear armament and genuinely thirsty for a sign of clear action amid the shilly-shallying on major national security threats, including Hizballah, Hamas and the Palestinians, displayed so far by the heads of the Olmert government. debkafile's military sources in the Gulf report that Iran, in contrast, is deep in preparations to sustain an attack and fight back.

The Tamir interceptor, which are designed to kill artillery shells and short-range rockets, undergoes its first test this week. Its object is to find out if its response time can be shortened against Palestinian Qassam missiles fired from Gaza or Hizballah's short-range rockets launched from Lebanon. According to Western defense experts, the air speed of a Palestinian missile fired from Beit Hanoun in northern Gaza is 200 meters per second; it covers the 1,800 meters from Beit Hanoun to the edge of Sderot in 9 seconds, whereas the Iron Dome's interceptor needs fifteen.

A poll released Tuesday, June 10, by the Democracy Institute, Jerusalem, registered a steep decline in the average Israeli's faith in his ruling institutions. The military wins the highest marks - 71%; political parties the lowest - 15%.Nearly 90% consider Israel to be polluted by corrupt government. Less than 50% have faith in the Supreme Court of Justice compared with 61% in 2007. Thirty percent believe the media is the foremost defender of democracy. Confidence in the police has dropped from 41% to 33%.

Two White House spokesmen stressed Friday, June 6, that Washington was committed to solving the Iran issue by diplomacy. They were fielding a barrage of questions on Israeli transport minister Shaul Mofaz's statement that an attack on Iran's nuclear sites looks "unavoidable" if it continues uranium enrichment - given the failure of sanctions. For Mofaz, who is campaigning to succeed Olmert as Kadima leader and next prime minister, a hawkish position on Iran will garner popular support.

Two foreign farm workers were injured by the salvo fired Saturday, June 8, after four Qassams exploded Friday causing extensive damage.On his arrival from a trip to the US, prime minister Ehud Olmert said Israel might have to carry out a major military action in Gaza to counter the cross-border rocket fire."At the moment the pendulum is swinging closer to military action..." he said.debkafile's sources report that Olmert has often made such comments with no results. He has called a security conference for Tuesday, June 9.

The meeting between the Israeli prime minister and president George W. Bush lasted less than an hour; It was more a farewell between two leaders on their way out than a down-to-earth exchange. debkafile's Washington sources report Olmert was informed ahead of his visit that the White House is expecting fresh intelligence on Iran's nuclear activities and will await evaluations from US experts before making decisions on how to act in the matter.

What brought the unnamed accuser from America to the door of the Israeli police at this time? According to an Israeli paper, he laid before police investigators strong evidence of a new and grave corruption charge against prime minister Ehud Olmert, the fifth case opened against him thus far - all predating his two-year term as prime minister. The attorney general Menahem Mazuz found the material substantial enough to order the police to question the prime minister under caution within 48 hours, raising one of the many questions on which a court gag order has condemned the public to ignorance.Israeli politicians are in a dither but treading on eggs until they too find out what it is all about, why now and whether Olmert can weather the new scandal.The Olmert government was stripped down to a fragile majority of 64.In the view of debkafile's political sources, Olmert's anonymous accuser was put up to opening his can of worms by a party seeking to cloud Israel's forthcoming 60th anniversary celebrations to which a glittering gallery of invited foreign guests, led by US president George W. Bush, is invited. That party, whether domestic or foreign, wants to get rid of Ehud Olmert.

Amnon Rosenberg, who is survived by a wife and three children, was killed by a shell fired from Gaza while at work in the Nir Oz factory, Nir-Lat, Thursday, June 5. Four more Israeli civilians were injured in the attack, two seriously. Hamas and Jihad Islami attacks on the neighboring Israeli population have escalated again since the beginning of the week and casualties have mounted, including foreign farm workers from Thailand.

Prime minister Ehud Olmert was forced to back down on his plan to call a security cabinet session Sunday to decide on the Egyptian-brokered truce in Gaza before leaving Monday, June 2, for a week of talks in Washington.A majority has come around to the position that effective military action against the Palestinian Hamas regime must come first. Most of the mnisters are now ready to defy Olmert and defense minister Ehud Barak who have rather pursued a truce.

Tzahi Hanegbi, chairman of the foreign affairs and security committee, has charted a three-point plan to extricate the country from the political crisis sparked by the corruption scandal surrounding prime minister Ehud Olmert. MK Hanegbi, hitherto considered a staunch Olmert loyalist, said Saturday, May 31, the government no longer has a moral mandate for major steps or a parliamentary majority.

debkafile's Jerusalem sources report: Tzahi Hanegbi, chairman of the Knesset foreign affairs and security committee has always been a staunch loyalist of prime minister Ehud Olmert. A shrewd party tactician, Hanegbi picked up on the line promoted by the prime minister's defense team, which challenged his rivals to throw the first stone, implying that every politician was as guilty as he. He realized that this line if adopted could finish Kadima for good.

Israeli prime minister Ehud Olmert schedules a consultation on the lingering Gaza missile crisis with defense minister Ehud Barak and foreign minister Tzipi Livni Sunday, June 1 before taking off Monday for a week of talks in Washington. The prime minister is traveling in the face of rising pressure for him to step down over the corruption scandal hanging over his head.debkafile reports: The three leaders have been warned repeatedly by Israel's military and intelligence chiefs that the longer effective action against Hamas and its allied terrorist groups is delayed, the harder and more costly in lives the operation will be.

Long Island financier Morris Talansky, the chief prosecution witness in the inquiry against prime minister Ehud Olmert described a long history of sums amounting to $150,000 handed to the suspect in cash or personal credit card when the recipient refused to accept checks. The financier testified to the Jerusalem district court in a pre-trial hearing Tuesday, May 27, which Olmert's attorneys tried hard and failed to prevent. Talansky stated firmly that, except in one case, the moneys were not requested for campaign funding but to finance Olmert's visits to America.

At the first session of the Golan lobby in Jerusalem Monday, May 26 National Union Knesset member Aryeh Eldad, citing the Treason clause 97 of the Penal Law, declared: "He who acts to remove state-owned territory from state sovereignty and cedes it to a foreign state is punishable by death or a life sentence." He later explained to his outraged fellow-lobbyists that he meant sentencing by a court of law. Eldad's comment referred to prime minister Ehud Olmert's reported offer to restore the Golan, which the lawmaker termed part of sovereign Israel, to Syria for a peace accord.

As this damaging revelation emerged in the High Court Monday, May 19, prime minister Ehud Olmert's office announced he would undergo a routine hospital test that night to monitor his prostrate cancer, which was disclosed last October as not life-threatening. Several lawmakers on both sides of the house want him suspended in view of the gravity of the suspicions against him.